Economists may debate why businesses exist but for most people the reasons are simple: to generate profits by meeting the needs of customers. In the course of doing that, jobs will be created, an economy built and taxes paid.
While a certain amount of red tape is inevitable, businesses do not exist primarily to serve the needs of governments. And while many business people will claim that their business model thrives on uncertainty, the truth is that most prefer a degree of certainty and stability in which to operate.
Judged by those standards, the last year or two have been extremely trying for many businesses, especially small- and medium-sized businesses which are the lifeblood of the UK economy.
Against the background of fundamental uncertainty regarding the nature of the post-Brexit UK economy, businesses are having to deal with a labyrinthine bundle of red tape which of itself adds nothing to the business but where failure to comply can lead to massive penalties. Here are just a few examples:
- massive increases in business rates
- Making Tax Digital - while HMRC has postponed part of this project, VAT-registered businesses will have to comply from April 2019;
- Off-payroll working (IR35) changes;
- worker status changes in the gig economy;
- uncertainty regarding the impact of customs changes following Brexit, and the impact on supply chains and export customers;
- doubts about the availability of temporary non-UK labour after Brexit; and
- tax gap figures attributing more than 40 per cent of the nation’s £33 billion tax shortfall to small businesses suggests an imminent period of much tougher scrutiny from the taxman.
The wide range of government departments responsible for what they perceive as these 'initiatives' may explain why so many are being imposed on businesses at the same time.
We call on the government to take a more joined-up view for the sake of businesses and the contribution they make to the economy. First, the government should only impose further changes which are absolutely necessary. Second, following cross-department liaison changes should be imposed in order of importance and only at a pace which businesses can deal with. If small- and medium-sized businesses are indeed the lifeblood of the UK economy, clogging the nation’s arteries with the cholesterol of uncoordinated changes is unlikely to result in a healthy outcome.